ICICI Bank credit fundamentals sound: Standard & Poor’s

Singapore/Mumbai, Oct 13 (IANS) Global rating agency Standard and Poor’s (S&) Monday said the fundamentals of ICICI Bank continued to be sound even as the country’s largest private bank reiterated that it faced no liquidity problem, had zero exposure to the US sub-prime assets and was more than adequately capitalized.The ratings agency said in a statement that ICICI Bank continued to enjoy investment grade rating of BBB-/stable/A-3 with regard to foreign currency counter-party credit rating and that the bank’s credit fundamentals continue to be sound.

It said the credit rating was sound due to its strong market position in the domestic banking industry, adequate financial profile supported by its healthy capitalization, satisfactory loan quality and diversification.

“The overseas loan and credit derivative portfolio of the bank, including its overseas subsidiaries, is predominantly to Indian companies for their Indian and overseas operations and hence its quality is largely dependent on corporate credit quality and economic conditions in India,” the S&P statement said.

Given expectation of continued strong growth in India’s economy, despite some moderation in growth in the near term, credit losses in this portfolio are not expected to be significant at this moment, the statement added.

The bank - through its subsidiary ICICI Bank UK Ltd - also has a sizeable $3.5 billion investment portfolio. This includes about $80 million exposure to Lehman Brothers.

“In our view, likely credit or marked-to-market losses on its overseas exposure can be easily absorbed within its financial profile, considering the size of its balance sheet of about $100 billion and capital base of about $10 billion,” the statement said.

“We also consider ICICI Bank to be systemically important and hence is expected to receive extraordinary systemic support in the event of any financial distress.”

A little after the statement was issued from S&P’s Singapore office, ICICI Bank’s executive director V. Vaidyanathan also issued a statement to customers from Mumbai.

The statement said that rumours being spread about the bank - many via short messaging services (SMSs) - were malicious and baseless.

It also reminded customers about the assurances on ICICI Bank and Indian banking given by the finance ministry and the country’s central bank, the Reserve Bank of India, and said the S&P statement reposed unequivocal certificate of confidence on the bank.

The statement then said the bank had categorically and in a transparent manner disclosed that:

- “We have zero exposure, directly or indirectly, to US sub-prime

- “We have 150 percent more capital than what banks are required to have

- “We are one of the highest capitalized banks in the country

- We have sound liquidity to meet needs of customers whenever and in whatever amounts.”